Inland revenue (IR) interest in stoozing?

smartsaver

The 'Savings' were all in my name and I am a lower tax rate payer so there should be no extra to pay (we hope). It's all off set against our mortgage now so shouldn't have any further problems.

Paul_Herring

smartsaver wrote:

The 'Savings' were all in my name and I am a lower tax rate payer so there should be no extra to pay (we hope). It's all off set against our mortgage now so shouldn't have any further problems.

Sorry - I didn't mean to imply that your husband should have had the same/or similar deduction; just trying to indicate to Schiff that it may not be as rare as it may have been when they worked in IR 12 years ago.

Unlike your husband, I don't have an SO to whom I can transfer savings to acheive a lower rate of income tax on savings interest, hence the fact I had to declare it last tax year. Seems they took notice

schiff

Paul - this I assume was interest received gross in which event I would expect it to be in your coding this year.
The other possibility is that you are a 40% payer and the IR have made an adjustment to your coding to try to collect the extra 18% tax on your interest, spread over the year (which might be considered kind!).
In both events, particularly the latter, no doubt you will be doing your own calculations at the year end to make sure they haven't overdone it!

ctm_2

Schiff - it is now commonplace for a deduction to be included in the code when asomeone who pays tax at the higher rate is in receipt of interest, to collect the extra tax due.

PokerPortal

smartsaver wrote:

We are normal PAYE employed and have our savings taxed at source. We are doing OK but dont earn mega bucks and have know idea why they picked on us.

We are happy to give any details they want but don't see why we should employ an accountant. Theres really nothing we can't 'account' for.

They did not pick on you. HMRC does do random checks on the SA returns. If any of the interest on savings was in the higher rate tax persons name, I hope it was declared on the SA Return, as you have to pay additional tax on it. If it was in the name of the basic rate tax payers name, you have nothing to worry about, unless the interest takes you over the higher rate threshold.

In general: Stoozing and Revenue & Customs are fine!

I work for HMRC*, and I am also self-employed, and I am a higher rate taxpayer. I also started stoozing recently (not on recent SA return, but will be on next one) and all I (you) need to do is declare the interest you receive.

Hope this helps

* I am not a 'taxman', I am an IT Support Officer (I look after the IT side of HMRC). but i have asked many colleagues about my SA Return.

isasmurf

schiff wrote:

The other possibility is that you are a 40% payer and the IR have made an adjustment to your coding to try to collect the extra 18% tax on your interest, spread over the year (which might be considered kind!).

If you are a higher rate taxpayer and your only income is through PAYE and savings then the extra tax on the savings interested is collected through your tax code. This is now standard practice to reduce the number of SA returns.

Bordera

Just caught up with this thread again (There is this horrible deadline next week keeping me a bit busy just now )

I am not an investigations specialist but a couple of things have begun to click in my mind. Without wishing to alarm you in anyway Smartsaver, I would recommend that you seek the advice of a professional tax consultant before replying to the letter you have received. Does it say Section 9A or Section 19A anywhere on it?

My concern is that your credit card statements have been requested. I cannot see that HMRC have any right to these, and they do now often try to push the boundaries of what they are entitled to ask for. I would seriously advise against sending these until HMRC have been made to explain their statutory basis for asking for them.

It is possible that either it is an inexperienced and perhaps overly enthusiastic Inspector of Taxes running what should be a standard enquiry (no offence intended to HMIT, we must all learn) or you have been identified as stoozers and HMRC want to examine the minutiae of the procedure and are using you as guinea pigs. This is something tried from time to time. Please remember that just because HMRC ask for something does not mean that they necessarily have a right it. There is a great deal more of this happening now. A lot of things have changed, as Bowser correctly points out.

While I can guess from what you say that what you are doing may be correct under the current understanding of existing legislation, it is now accepted that tweaking legislation can be as productive for HMRC as it is for accountants. (Schiff, reference the current Arctic Systems case – Settlement legislation applied to husband and wife, HMRC are appealing the December 2005 Court of Appeal ruling)

Smartsaver, there is a professional body called the Chartered Institute of Taxation and they will be able to help you find a good tax accountant in your local area if you contact them. The website is HERE. I know it sometimes seems as if we cost a fortune but we really do work very hard for our daily bread, I promise you.

This enquiry could go away after one letter, in which case it will not cost you a great deal to regain your peace of mind. If it becomes something bigger, again please do not panic. The people involved in “test” cases such as the Arctic Systems one I referred to normally have the costs of the case met by the larger firms of accountants. Winning or losing a test case is a way of testing the law; it in no way implies the people involved have done anything wrong, they simply match a set of criteria that a particular bit of tax law applies to. If you have received a letter like this probably many other people have too.

I am trying very hard to find a way of recommending a little caution without panicking you and I know I have probably failed, for which I apologise profusely.

schiff

Bordera - I knew you would be able to add something really useful and thanks for the links.

We are all trying to help mr & mrs smartsaver on here but, in the process, I am personally being brought up to date on current IR tactics. I can now see I was well out of touch.

smartsaver

Bordera wrote:

I am not an investigations specialist but a couple of things have begun to click in my mind. Without wishing to alarm you in anyway Smartsaver, I would recommend that you seek the advice of a professional tax consultant before replying to the letter you have received. Does it say Section 9A or Section 19A anywhere on it?

Hi and thanks no BIG alarm bells ringing yet :eek:. Yes at the bottom it says 'S9A opening letter' _pale_ Is this important?

And could we just ring the number given and ask why they want our credit card statements?

isasmurf

As they're asking for your credit card statments I'm wondering if they are thinking you may be hiding money in offshore accounts. There was a recent landmark ruling in which HMRC's special Offshore Fraud Project Team won forcing an unnamed bank to give details of all its customers who had credit cards linked to offshore accounts. I can't think of any other reason why they would want your credit card statements, but then again I'm not a Tax Inspector!